If you own property in Spain, is it worth making a will with a Spanish notary?

The purchase of property in Spain by foreign owners is becoming increasingly popular. However, with the growing number of investors comes an important question: when owning property in Spain, is it necessary to draw up a will with a Spanish notary? Read the material, prepared in collaboration with mec. María Ruiz López from the law firm AdwokatwHiszpanii.pl.

It is worth knowing that there is a mechanism in the European Union which, in many situations, makes it possible to resolve the succession of an estate in another Member State.

European Certificate of Succession – what is it?

One of the most important instruments introduced in European law is the European Certificate of Succession. It is an official document, established by the European Union to facilitate the handling of successions involving more than one Member State.

The document was introduced on the basis of Regulation (EU) No 650/2012 of the European Parliament and of the Council on succession and is in force in most countries of the European Union, including but not limited to:

• Poland,
• Spain,
• Germany,
• France,
• Italy.

The European Certificate of Succession makes it possible to officially confirm who the heirs are and what rights individuals have to the deceased’s estate. The document considerably simplifies administrative procedures, especially when the inheritance includes property located in another EU country.

How does the European Certificate of Succession work?

The most important advantage of this document is that it is directly recognised in other EU Member States. This means that heirs do not have to go through the additional recognition procedures that were necessary until a few years ago and often took many months.

The European Certificate of Succession can be issued by:

• notary,
• the court handling the succession proceedings.

Inheritance of real estate in Spain (example)

Imagine the following situation: a Polish citizen owns property in Spain and dies. His estate includes a flat or house on the Costa del Sol, which his son legally inherits.

In such a situation, the heir can carry out the succession procedure in Poland and obtain a European Certificate of Succession. This document then allows the property to be registered in the name of the heir in the Spanish property register (Registro de la Propiedad).

Certification can be obtained:

• at a notary in Poland,
• as part of legal proceedings.

For the document to be used in Spain, it is usually necessary:

• to be endorsed with an Apostille in accordance with the Hague Convention,
• providing sworn translation into Spanish.

Inheritance in Spain: what documents are needed?

When registering the property in the name of the heir in the Spanish register, it will also be necessary to provide additional documents such as:

• N.I.E. identification number of the heir,
• death certificate of the owner of the property,
• documents proving title to the estate (e.g. European Certificate of Succession),
• confirmation of payment of inheritance tax in Spain (Impuesto sobre Sucesiones).

How much is inheritance tax in Andalusia?

Immediate family (children, spouse, parents)

There is a very favourable system in place for the nearest heirs:

• up to EUR 1 000 000 per heir – tax is EUR 0,
• above this amount, a 99% tax credit is applied.

In practice, this means that most inheritances in Andalusia are not taxed or the tax is nominal. In Spain, different parameters can be used to determine the value of a property for inheritance proceedings. This can be done on the basis of a reference value from the cadastre or the market value on the date of the testator’s death.

The choice of one option or the other is very important for several reasons. In practice, the two values (cadastral and market value) can differ significantly. On the one hand, it seems obvious that it is better to use the lower value in order to pay less inheritance tax. However, what is actually more important is what the heir intends to do with the property after becoming the owner.

If he intends to sell the property after inheriting it, it is advantageous to pay higher inheritance tax and take a higher value as a basis (to avoid paying higher income tax on the sale), while if he intends to retain ownership of the property, it is advantageous to use a lower value.

It is important to consult a law firm before starting the inheritance procedure. Let us assume that the heir chooses a reference value from the cadastre, which is €3 million. In this case, in Andalusia, the following would apply:

3,000,000 euro – 1,000,000 (exempt amount – tax credit) = 2,000,000 euro.

Inheritance tax in the first step – according to the progressive state rate – would amount to approximately €550,000. To this amount, the 99% relief applicable in Andalusia should be applied, resulting in approximately €5,500.

In addition, you also have to pay a tax on the increase in value of the property (Impuesto de Plusvalia), but to calculate this you need specific data from the municipality where the property is located.

Wills and property in Spain – summary

Ownership of property in Spain by a national of another EU country does not automatically mean that a will must be drawn up with a Spanish notary.

Thanks to EU rules and the institution of the European Certificate of Succession, it is possible to carry out the succession procedure also on the basis of succession proceedings carried out in the country of the deceased’s last permanent residence.